Q3 2024 Northwest Bancshares Inc Earnings Call
Thank you for standing by. My name is Kayla and I will be your conference operator today. At this time, I would like to welcome everyone to the Northwest Bank Shares Inc. 3Q-2024 earnings call. All lines have been placed on mute to prevent any background noise.
After the speakers are marked, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, follow by the number 1 on your telephone keypad. If you would like to withdraw your question again, press star and 1.
Speaker Change: I would now like to turn the call over to Joseph Canfield, Executive Vice President, Chief Accounting Officer, you may begin.
Joseph Canfield: Good morning everyone and thank you operator. Welcome to Northwest Bank Shares 3rd Quarter, 2024 earnings cloud. If you want to meet today, or Louis Torchio, President and CEO of Northwest Bank Shares Inc. The holding company for Northwest Bank. Douglas Schosser, our Chief Financial Officer and TK Creel, our Chief Credit Officer.
Joseph Canfield: During this call, the Holyford information included in the Supplemental Learning to Release presentation, which is available on our Investory Relations website.
Joseph Canfield: This presentation includes our forward-looking statements and other data, including non-gap measures.
Joseph Canfield: Please note that actual results may differ from materialy from the four-blossing statements made today, October 29, 2024.
Speaker Change: These statements will not be updated after today's call. Thank you and now I will hand it over to Luke.
Luke: Good morning everyone.
Luke: Thank you for joining us to discuss our quarterly results. We deliver solid returns and I'm pleased with our core financial performance which Doug will cover momentarily.
Luke: I'm particularly pleased with our NIMIC expansion, Porter of recorded revenue growth and continued improvement in our efficiency ratio.
Luke: Disclared demonstrates that we are delivering on prior commitments made.
Luke: The modest we continue to see deposits rise, even with the near-best in-class cost of funds.
Luke: In addition, we continue to see positive results from the security portfolio restructure execute the last quarter, which continues to positively position North West for the upcoming quarters and years ahead.
Luke: I want to thank every team member for their talent and dedication in producing these results. I'm proud of your hard work and focus on our customers and communities.
Luke: I'd like to take a moment to discuss the increasingly dynamic emanating environment within our markets. That's previously stated, Northwest and our board are steadfast in our commitment to responsible growth both organically and through acquisitions.
Luke: I'm in frequent discussions with other bank leaders and investment bankers positioning Northwest at the page sleeve for future opportunities.
Luke: Our leadership team remains dedicated to enhancing our performance, thereby strengthening our financial standing and bolstering our acquisition potential.
Luke: Finally, as we have for the past 120 quarters, on behalf of the Board of Directors, I'm pleased to declare Quarterly dividend of 20 cents per share to our shareholders of record as of November 8, 2024.
Speaker Change: Now it's my pleasure to introduce Doug Schosser, Northwest Bank, chief financial officer who will take us through our financial results.
Doug Schosser: Thank you, Lou, and good morning everyone. Before we dive into today's presentation, I'd like to welcome Joe Canfield, who you already heard from at the top of the call. Joe recently joined Northwest Desert Executive Vice President in Chief of Caching Off-Surge.
Doug Schosser: Additionally, we've named a new treasure at this quarter, Sean Moro. We've been with the firm for over seven years and was formerly our assistant treasure, and was promoted with Jeff Maddigan's departure.
Doug Schosser: He was unable to join this call, but will be on feature calls.
Doug Schosser: Let's begin on page 4 of the earnings presentation, where a highway north west financial results for the third order of 2020-4.
Doug Schosser: We reported net income of 33.6 million dollars for 26 cents per diluted share.
Doug Schosser: Our net interest margin expanded by 13 basis points for this quarter to 3.33 percent, dated partially by an interest recovery on a non-accrual loan, which added 4 basis points to that margin.
Doug Schosser: We continue to see our margin increase due to our continued pricing discipline across our balance sheet, including our deposit portfolio and our newly originated loans, and supported by a more favorable interest rate environment.
Doug Schosser: Compared to the same quarter last year, our loan portfolio was essentially black, and deposits approved by 3.2%.
Doug Schosser: excluding a $39 million loss on the sale of the securities as we reach the decision to our balance sheet.
Doug Schosser: Now, I'm interested in come decreased by $3 million due to a loss on an equity method investment.
Doug Schosser: Lower Gaines, on the sale of SBA loans, and a loss on the sale of some bank owned real estate fired from past acquisition activity.
Doug Schosser: Not an interesting spent, decreased by nearly 2% or approximately 2 million dollars from the second quarter.
Doug Schosser: Credit Quality remains strong. Overall, allowance coverage slightly increasing to 1.11% of loans for 1.10 last quarter and a year ago quarter.
Doug Schosser: Finally, our capital position remains strong with an estimated tier 1 capital to a 13.7% at 9.30.
Doug Schosser: Now let's delve into additional details.
Doug Schosser: I'm Page 5. You'll see that our commercial and industrial loans grew by 2.8% since last quarter, and 25.7% year over year, while residential mortgages declined by $190 million or 5.5% since last year.
Doug Schosser: This shifts underscores our focus on commercial banking transformation.
Doug Schosser: Our commercial real estate portfolio is strength by just 1% since last quarter. reflecting a more desirable moment with higher share of C&I compared to CRE.
Doug Schosser: Our loan yields have steadily increased over the last five quarters, now standing at 5.6%.
Doug Schosser: Moving to pay six, the POSITs remained largely flat since last quarter, and up 3.2% year over year. Across up the POSITs only increased by two basis points, the lowest rate in the past five quarters.
Doug Schosser: Most of Todd the Grothe occurred in interest-bearing demand of products, with modest growth and consumer savings and money market account.
Doug Schosser: The current cost of the process stands at 1.78% which is near-busting class relative to our peers.
Doug Schosser: On page 7, we cover the net interest margin which now stands at 333 Vs. A 13 Vs. improvement from the second quarter and 10 Vs. higher than the same quarter last year.
Doug Schosser: Fully tax equivalent at interest income grew by approximately 4% from 108 million last quarter to 112 million.
Doug Schosser: This marks our second consecutive quarter of net interest income growth and nomenproven, reflecting reduced borrowings, higher loan yields, and no growth on our cost of funds.
Doug Schosser: We ended the quarter with a cost of funds at 2.39%, one basis point lower than the prior quarter. We have included some additional information on the margin on the next few slides.
Doug Schosser: Moving to slide 10. 9 interesting come, the crease order ended September 30, 2020, 23. Due to a 3 million dollar decrease in income from bank loan life insurance, resulting from death benefits received in prior periods.
Doug Schosser: Excluding the $30 million loss on the sale of securities last quarter, none interesting come decreased by $3 million from the prior quarter due to loss on the equity metronome investment, lower gains on the sale of SBA loans.
Doug Schosser: and the loss on the sale of real estate that was part of some previously acquired banks and was largely big enough.
Doug Schosser: I'm Flight 11, details of our non-intrace to expense.
Doug Schosser: Our efficiency ratio improved to 64.8% reflecting a nearly $2 million reduction in its specialist medical forum. We continue to ensure its work previously handled by more extensive third-party terms to reduce overall costs and increase the quality of that work.
Doug Schosser: We remain focused on finding additional cost reductions with that impacting core operations for diminishing the service levels our customers expect.
Doug Schosser: Regarding credit quality on page 12, our Alliance alone coverage increased slightly to 1.1% with net charge off such as 18 basis months for the quarter.
Doug Schosser: Page 13 shows that overall credit requirements remain strong, with an improvement in not performing assets.
Doug Schosser: While 30 day loan delinquent with CSOS light increases 70 basis points.
Doug Schosser: and the FACI-Lone's also been recently to 2.83% of total.
Doug Schosser: Sly 14 highlights our commercial loan concentration showcasing a diverse portfolio. Strong underwriting has helped us avoid many CREs specific issues and we have minimal exposure to large metro areas, large metro offices, or rent controlled markets.
Doug Schosser: Finally, let's discuss our outlook for the remainder of the year. We will continue to focus on responsible and profitable loan growth in the commercial space, particularly CMI lending. We anticipate low single digit loan growth and expect a positive streaming largely flat.
Doug Schosser: We will manage the path across well-bounded and client expectations and market pressures allowing for modest net interest margin expansion.
Doug Schosser: We expect non-interest income to grow by the mid-single digits, often the 930 base, given some of the one-time items this quarter.
Doug Schosser: We continue to keep expenses in the low single digit growth recorder, possibly impacting our efficiency ratio. Both our tax rate and net charge loss are expected to normalize, both sort of the third quarter rate for taxes and towards our long-term average for charge loss.
Speaker Change: I'm the half of the entire leadership team and the Board of Directors. Thank you for joining us this morning. I will now turn the call over to the operator who will facilitate the live Q&A session.
Speaker Change: At this time in order to ask a question, please press star then the number one on your telephone keypad. Our first question comes from the line of Daniel Tamo with Raymond James, your line of open.
Daniel Tamo: Hey, good morning, everyone. Thanks for taking my questions.
Daniel Tamo: Maybe it's first just starting on the fiancum guidance, just curious.
Daniel Tamo: It looks like it's a lower number than when I was looking for and then you had the...
Daniel Tamo: and Mark's Market in the fourth quarter within the other. Some curious if that is...
Daniel Tamo: Still a good number going forward that million given year you're talking about
Speaker Change: the guidance off of the 27 million, 27,000,000,000 in the third quarter. Going forward, it's kind of we get into 20, 25,000,000. That's going to go back to a number similar to what we saw in prior quarters, maybe in the two or three million dollar range per quarter.
Speaker Change: Yeah, we'll provide more guidance for 2025 when we go through the full fourth quarter results sometime in January. So we'll update that guidance but for now we're just guiding to the more normal lives level after you account for some of the one-time losses that we had for the fourth quarter.
Speaker Change: So just to be clear, then you're expecting a number similar to the one million level in the fourth quarter.
Speaker Change: Yeah, I would say, you know, we're expecting a number closer to where we were at in the third quarter after you adjust for the security or the second quarter after you adjust for the security losses.
Speaker Change: So again, if you're going to rebound back to mid-single digits, you're going to pick up another couple million dollars on that line and a million and have to 3 million somewhere in that range. So we should expect to get back to that kind of level, that core level of 29, 30 something like that.
Speaker Change: Okay, so when you say mid-single digits, you're not saying annualized, you're talking about a like a stated mid-single digit from the third quarter. I think that made a good conclusion.
Speaker Change: God, okay, all right, thank you.
Speaker Change: and then also I guess maybe looking at the credit side so it looks like you're normalized in that charge off guidance went up from last quarter. So curious kind of what drove that thought and then if there was...
Speaker Change: If there was visibility into the path of getting there, if that, you know, when you say,
Speaker Change: You're getting trending towards that if that's because you see something near term that's going to take you into that range or if that's more of a
Speaker Change: and we expect to be there at some point. Thanks.
Speaker Change: Yeah, it's more the latter, right? We're just trying to guide to what a normal life level of charge also would be for the firm over a long period of time, so we're obviously in really really good credit quality environment right now, so...
Speaker Change: I think most banks are saying the same thing, right? We do expect this environment will normalize and it will get closer to those long-term averages. We're not suggesting that we expect any one quarter to be significantly different. It's more you're going to see some volatility in it as.
Speaker Change: Individual credits can create a bit of volatility when you're at these low levels.
Speaker Change: and in terms of the increase in the normalized guidance from the last quarter, what was the driver there?
Speaker Change: I think that was just more me getting clarification from credit partners.
Speaker Change: As so what that longer term normal would be. So last quarter we were guiding a little bit lower than that, which is true. We haven't really changed our credit out. Look, although the guide is a little bit higher. Again, it is not indicative of a single quarter. It's indicative more of a long term trend.
Speaker Change: So just getting a little bit more consistent with where internally we are.
Speaker Change: Okay, thanks. You all right. I appreciate it. I will add to it. We continue to rebalance towards more commercial. We're going to expect a little bit of a different profile going forward. But again, we're talking longer term trends not a specific quarter that I'm guiding to.
Speaker Change: and I understand. Alright, thanks Doug for your show, Douglas Schosser.
Speaker Change: Yep.
Speaker Change: In your next question, come to the line of Manuel Navaz with the DA Davidson.
Manuel Navaz: Can you remind us some of your targets in M&A kind of financial hurdles, geographies that you might be finding in intriguing and size of targets and opportunities they look important? Just kind of reset that for us.
Speaker Change: Good morning, Emmanuel Howardio.
Speaker Change: Yeah, so, you know, as similar to last quarter, I would say that, you know, first of all, you know, we're focused in markets in our forestate footprint.
Speaker Change: and the opportunities that come up to us really fall into a couple different categories, sort of an in-market deal, something that probably...
Speaker Change: looks more like the geography in Columbus and Indianapolis growth markets that we happen to be in and around.
Speaker Change: and then um
Speaker Change: and finally maybe strategic from a product or diversification standpoint. But I would say that the most important thing for us is really how creative it is.
Speaker Change: What's going to cost us to acquire? We're really into with that. And then I think, you know, strategically, you know, some of the in-market stuff is...
Speaker Change: Since we haven't really had an acquisition since...
Speaker Change: Since the COVID era, we'd be looking at doing something that we're confident we can execute on, highly creative, a size from a size perspective, more what you expected in the past, the month to 3 billion range.
Speaker Change: and something that we feel highly confident in executing on making the deal creative.
Speaker Change: The other note there is, you know, in the two fast growing markets being Columbus and Indianapolis.
Speaker Change: We're going into strategic planning here in a month and we're evaluating the Novostrategy branch expansion in those areas. We've already hired some commercial lenders with get some business bankers.
Speaker Change: and we're looking at the viability of using some...
Speaker Change: from Capital to Expand in two fast-as-growth markets in the Midwest from a Denova strategy. So, you know, as I stated in my statement, the...
Speaker Change: The market's picking up. I'm out in the marketplace meeting with other bank CEOs. We're having some conversations. But we're going to be very prescriptive and very careful to make sure that our transactions are going to be highly creative.
Speaker Change: Hey, man, the only thing I would add to is we are looking for similar, you know, low cost granular deposit basis as well. So we'll be we'll be looking for deal that will add to the springs that we already have within the spring dress.
Speaker Change: I appreciate that color as interesting about the LPO development. That leads to kind of my next question. Can you?
Speaker Change: Going to where you had strength on the commercial side, kind of on business line and regionally and kind of where where do you have strengthen commercial regionally?
Speaker Change: Yeah, I mean, I would say that the overall model for commercial continues as we've done our expansion. So I think we've talked about it before, so we have some new verticals that have come online. Several of them actually started this year, so you've got sports demands, you've got sponsor plans.
Speaker Change: Branch out of the finance. We've got a corporate finance team and we have a corporate finance.
Speaker Change: So as you continue to see all of those businesses mature, Clinton, if the NANDS corporate finance being the longest term ones, you're just starting to see our folks build pipelines and get more at that.
Speaker Change: which we expect that progress to continue. So, in talking a little bit to J.D. Marzo, he's seen his pipelines grow anywhere from 10 to 20 percent. That's in the highly probable categories.
Speaker Change: and again I think it's just a matter of maturation as these businesses.
Speaker Change: are on the ground longer as our credit teams and business leaders are out getting more confidence in the type of deals.
Speaker Change: [inaudible]
Speaker Change: I would say it's relatively broad-based across all of those verticals and we continue to look forward to those particular verticals maturing over the course of 2021-5.
Speaker Change: Any region stand out more than others?
Speaker Change: I know that I've seen any major concentration in any one of our regions in terms of opportunities or actual credits that we've approved.
Speaker Change: Good luck!
Speaker Change: and then just a quick follow-up on them, what do you kind of assume in terms of initial deposit data in your guidance or initial loan data for the fourth quarter? And where can they go to the full cycle? Just kind of talk to do that a little bit.
Speaker Change: Again, I think we'll provide a little bit more color on that. Going into 2025 in terms of what our margin guidance will be. I will just say that this last recap. Some of our depots of pricing changes didn't go in until the very end of September, like literally on the 27th of September, so we still have some.
Speaker Change: and we're not suspecting that there is going to be significant additional Fed cuts this year.
Speaker Change: 125 basis point cut in November in the guide that we provided. But again, we're still going to pick up.
Speaker Change: and the last cuts that had some deposits changes that came lead in this cycle.
Speaker Change: How successful were you to lower the positive rates? Do you have like an end up period to positive coughs? Level to disclose how you do it into October. Has it been pushed back on the positive declines?
Speaker Change: So we're not providing an end up month guide. As you've seen, we had very, very low deposit growth.
Speaker Change: this quarter to pause the cost growth. Given the fact that I just said we had.
Speaker Change: Race that winner has of 927. You can expect that that positive cause will continue to trend down next quarter. We have been
Speaker Change: Pleasantly surprised and comfortable with the deposit renewal rates that we've been seeing in the book and in our ability to maintain our deposits.
Speaker Change: with this pricing. So again, I believe we kind of continue to have a very reasonable pricing stance within our markets and against our competition and we have seen our...
Speaker Change: Customer Base, respond accordingly without having significant levels of.
Speaker Change: Rob, as a result of those in line with market price changes that we made.
Speaker Change: I really appreciate the discussion. Thank you.
Speaker Change: Good.
Speaker Change: In your next question, come to an align of Matthew Breeze with Steven's ink, your line is open.
Speaker Change: Hey, good morning.
Speaker Change: Morning, Matt. Morning, Matt.
Matthew Breeze: I was hoping to tell me how a couple of things. The first one is, could you break out for us what pure floating rate loans are? The percentage of total loans, meaning price to offshore work or crime? If you have it, what the yield is on that book versus everything else, you just a bowl and six rate book.
Speaker Change: Yes, if you go into our deck on slide EAT, we provided, although we didn't give you the rate index that they were off of, we did provide fixed and floating percentage across our earning assets.
Speaker Change: So the aggregate book is showing 24% floating 68% fixed and you can see it broken down across our categories and we also provided some additional detail on the funding mix side of things and how those would tend to react over time.
Speaker Change: This is great. Thank you. Okay. I'll just go here. Do you have any idea on the fixed rate what the duration is or how much you expect to replace over the next bullet? 12 months.
Speaker Change: I mean, again, our residential mortgage book is our single largest book and you can assume like everybody else that is a pretty long tenured book with relatively low yields and then the second largest.
Speaker Change: Book in that consumer, air will not second largest commercial real estate, something slagged us. But if you look at consumer as well, that is a pre-sizable auto loan portfolio that again going to have generally fixed re-duration of a much lower fixed rate loan of a lower duration.
Speaker Change: Good.
Speaker Change: Could you talk a little bit about the pace of seeing I grow, obviously, that's kind of in the line. Sure, work work is come from recently. Should we expect this kind of pace to continue, you know, kind of, into high-smoke, they just not a poorly-based, and where do you want to see an eye-loves two as a percentage of total moments? Where do you feel like the perfect level is?
Speaker Change: Yeah, I don't know that we have a specific target of where that level would be. I think we'd like to see an eye business. We've made some significant investments in that business over time. We plan to continue to grow the C&I portfolio as a percent of total. Again, we have a pretty significant amount of runoff in that consumer book that we would like to...
Speaker Change: Replace with some more commercial loans. And I would generally say, you know, the commercial real estate book, although we're still in that market, we don't tend to significantly.
Speaker Change: and Grow That. So the bulk of our commercial growth will be into CNI and we would tend to run down and support the funding of that by run down of mortgage and home equity and consumer. Just as natural cashless and portfolio occurred.
Speaker Change: and I would just add to that right.
Speaker Change: While we don't really have a target percentage, what we're looking for there is balance, right?
Speaker Change: and we're also looking for the anti-lary economics that are going to be meaningful to us from a fee standpoint, and the positive standpoint to help us grow deposits. We're under indexed.
Speaker Change: and the commercial deposit space. We have a real focus on not just giving out loans in the CNI space that eat up capital. So we're looking to gather deposits in our strategy, a number of our businesses.
Speaker Change: like the sponsored finance business, the franchise business, all come with the posits and fees, full deposit relationship.
Speaker Change: It is really strategic in that we want a better revenue stream, we want more balanced economics and we want a loan book that is consistent through various economic cycles. So I think you'll continue to see that remixing, but ultimately we'll get to the equilibrium there and I think it'll produce much better economic results for financial results.
Speaker Change: Understood, okay last one for me, just...
Speaker Change: You'll know those lines that we continue to remex into seeing it.
Speaker Change: The affair was soon to preserve as a percentage of loans increases as well. We haven't seen it really, at least on that metric, grown much over year, but I'm curious as time goes on whether or not that that 1-11 reserve will require.
Speaker Change: Yes, so we're very entuned with that remixing and you're absolutely right. We will see an increase over time.
Speaker Change: in the reserve.
Speaker Change: You know, prudently.
Speaker Change: We built the infrastructure to make this transition. We understand the risk adjusted returns and the increased risk in moving away from residential mortgages into sea and islanding. We built in our risk enterprise. We built the three lines of defense.
Speaker Change: and we're investing in some smoothies, risk rating, software, et cetera. So yes, it's all part of the strategy.
Speaker Change: and we've procured a number of the senior leadership who've been there done that.
Speaker Change: So this isn't something that is novel for us and so I think we understand the risk component of the transition and we'll the reserve will reflect that.
Speaker Change: God, that's all I had. Thank you for taking my questions. Thank you.
Speaker Change: and your next question comes from the line of Frank Schraude with Piper Sandler. Your line is open.
Frank Schraude: Morning. Morning. You guys have always been seeing some pretty good commercial growth here in the 2017. You talked about continued runoff.
Frank Schraude: I'm a consumer side of things. Just one thing about four cue is the level we saw in terms of runoff in the consumer book in the third quarter. That are in the world place to think about attraction and four cue. You know, just trying to think.
Frank Schraude: about getting to that low single digit long growth in the fourth quarter given the consumer side of things. You know, through the further ramp up in commercial and any color you can just kind of provide there in terms of pull over the quarter growth. Thanks.
Speaker Change: So if you recall there was quite a bit of, there was a lower level overall vehicle sales I believe in the third quarter They had a couple of different things that were working against them in terms of they had that technology matter and then in general there was just a bit lower demand
Speaker Change: So we are looking at our pricing on the consumer book and trying to correct that with some better pricing.
Speaker Change: to drive a little bit more consumer loan growth. So ideally what we'd like to see is that overall level of decline slow so that we can show the modest loan growth that we're forecasting right now. So again, I mean, subject to the overall economy and what the market is giving us.
Speaker Change: We are doing things on our side to be praised, competitively so that that will run off slow as a little bit or so that the net change in the portfolio is less negative and gives us an opportunity to show that zero to 2% or really guide we're given our one growth.
Speaker Change: Hopefully that answers your questions. Yeah, that's great. And then just thinking, you know, credit, obviously we're all looking pretty good. You had the increase in classified and you called out.
Speaker Change: to fit a segment there, healthcare.
Speaker Change: and I just wanted to go as you know, I think in the past you guys.
Speaker Change: and I'm going to talk about some stabilization you're seeing in that segment. Just curious if the increase in class slide reflects any sort of internal review in the quarter or just any more color there. Thanks.
Speaker Change: Sure.
Speaker Change: Yeah, no, this is a T.G.A. Krill. Thanks for the question, Frank.
Speaker Change: We are reviewing that in the majority of that portfolio quarterly. So the risk rating changes are reflective of that. That said, as we noted, we had a non-conforming asset on the loan pay off. That was within that same portfolio. So what we're seeing is, you know, transition of the portfolio.
Speaker Change: Through the criticised in class-wide and then we are seeing a market for these. That non-performing loan-exited developer was able to find a suit or for it. We do feel positive about the overall market, slowly improving the sector. We actually had more number of loan upgrades and downgrades. It's just a couple of downgrades or a larger one. So the dollar amount actually increased.
Speaker Change: That's your, okay. That's all for then. Just let me just want to make sure I just clarification on part of the guide. When you guys talk about the...
Speaker Change: Hello single digit growth in NEM link quarter into the end of the fourth quarter. I just want to make sure.
Speaker Change: I don't know if it's too fine at the point but anyway you mentioned diabetes for basis points on the interest recovery on the non-acquole loan. So that low single digits also the report number off of that 333.
Speaker Change: It'd be off the 3.29. That's why we wanted to highlight the four basis points. Like, despite we had an interest in comments, we cleared that non-accrual loan from the books. So you would adjust that down the 3.29 and then you'd do low single digit off of that.
Speaker Change: Great. Okay, appreciate it. Thank you.
Speaker Change: And again, if you would like to ask a question, please press star and the number one on your telephone keypads. The next question comes from the line of Daniel Cardenas with Jamie Montgomery Scott. Your line is open.
Daniel Cardenas: I'm gonna see the good morning guys.
Daniel Cardenas: I did it morning.
Daniel Cardenas: Just a quick quick question in terms of thoughts on any additional balance sheet restructuring efforts coming in the fourth quarter or into 2025.
Speaker Change: We don't have anything planned. I mean, there's still, we're always evaluating the opportunities that the market would give us, but I think, right.
Speaker Change: But where are the...
Speaker Change: Current portfolio stands. We also, as I mentioned at the beginning of the call, right, we had a change in our treasure. So, again, I think you would, you should not expect to see anything dramatic from us in terms of Restructures or things that we would be doing in the next quarter or two, but we'll keep an eye out for opportunities. And if one becomes economically advantageous to us, we'll consider doing it.
Speaker Change: Nicholas Scott.
Nicholas Scott: and then with just going back to credit quality here quickly and the increase in the class five levels. Should we be thinking that maybe provisioning goes up a little bit if these class five levels can't come down that kind of a good assumption here as we look at the Q4.
Speaker Change: So the provisioning you know is occurred for those credits you know quarterly migrated. At this point I would not expect material increases in the provisioning for the long term healthcare portfolio.
Speaker Change: and then how many credits made up that increase?
Speaker Change: made up the increase in the classified loan level? Yes, yes, yes, yes, I'm sorry about that.
Speaker Change: i
Speaker Change: Here actually.
Speaker Change: Ned, it was about five credits.
Speaker Change: But again, there were some that came in and some that went out. So we actually had more upgrades than downgrades.
Speaker Change: Okay, any geographic concentration in those five credits?
Speaker Change: No.
Speaker Change: Thank you.
Speaker Change: All right and then quickly just one other question in terms of potential de novo in Columbus and Indy. How long do you guys think it takes or historically what is what is proven to be a kind of the break-even period for for de novos?
Speaker Change: you know, in your history.
Speaker Change: Yeah, I would say let us come back on that. So we're looking at that strategy right now, as you will recall, last time we commented that we added Jörg Bauer to the team, long-term PNC consumer bank specialist.
Speaker Change: going through an investor day at some point over the course of next year, at which point we could talk a little bit about those plans more holistically. So, we'll take a pass on that question for right now, and we'll answer that with a little bit more detail when we're more
Speaker Change: ready to provide details on that strategy.
Speaker Change: Okay, just to clarify, Mike.
Speaker Change: Well, just to clarify my response on those numbers and classified, that was within the long-term health care portfolio.
Speaker Change: All right, no, perfect, perfect. All right, that'll do it for me. I'll step back right now. Thank you.
Speaker Change: Great, thanks.
Speaker Change: and others. There are many more to come. Thank you for watching. I hope you enjoyed this video. If you did, please give it a thumbs up and subscribe to my channel. I'll see you next time.
Speaker Change: And there are no further questions at this time. This does conclude today's conference call and you may now disconnect.